Anil Ambani, Others Appeal Against SEBI's Rs 625 Crore Penalty Directive

Anil Ambani and other entities have filed an appeal against the Securities and Exchange Board of India's order imposing a fine of over Rs 625 crore. The Securities Appellate Tribunal will hear the appeal and related matters on Oct. 18.

SEBI had barred Ambani and the other implicated entities from participating in the securities market for five years due to allegations of fund diversion from Reliance Home Finance Ltd. (RHFL). While Ambani faces a five-year restriction, RHFL itself has been sanctioned for only six months.

The market regulator's extensive investigation found that Ambani, aided by key managerial personnel at RHFL, allegedly orchestrated a fraudulent scheme to syphon funds by presenting them as loans to connected entities.

SEBI's 222-page report put forth serious concerns about RHFL's lending practices, noting that the board had expressed apprehensions about the composition of its lending portfolio, which were ultimately disregarded.

The report revealed that loans worth hundreds of crores were approved for companies with little to no financial backing, leading to widespread defaults. RHFL's loan portfolio skyrocketed from Rs 3,742.60 crore in 2017-18 to Rs 8,670.80 crore in 2018-19, exacerbating the company's own debt obligations.

Additionally, the investigation uncovered significant procedural flaws in loan applications, including incomplete documentation and inadequate eligibility checks. Despite these red flags, RHFL’s credit committees continued to approve loans, raising further questions about governance within the organisation.

Other individuals involved in the case, such as Amit Bapna, Ravindra Sudhalkar, and Pinkesh R. Shah, face hefty fines ranging from Rs 21 crore to Rs 27 crore. Several other entities implicated in the scheme, including Adhar Project Management and Consultancy Pvt. and Reliance Big Entertainment Pvt., have also been fined Rs 25 crore each.

SEBI's findings were prompted by multiple complaints regarding fund diversion at RHFL, revealing a troubling pattern of expedited loan approvals.